Cactus(US:WHD)2025-07-31 21:27PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Cactus, Inc.'s unaudited condensed consolidated financial statements as of June 30, 2025, including balance sheets, income statements, cash flows, and notes on accounting policies and segment performance Condensed Consolidated Balance Sheets Total assets increased to $1.82 billion by June 30, 2025, driven by cash growth, while total liabilities remained stable and equity rose to $1.35 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $405,177 | $342,843 | | Total current assets | $873,351 | $774,688 | | Total assets | $1,824,529 | $1,739,328 | | Liabilities & Equity | | | | Total current liabilities | $179,963 | $178,824 | | Total liabilities | $475,992 | $475,149 | | Total stockholders' equity | $1,348,537 | $1,264,179 | Condensed Consolidated Statements of Income Total revenues and net income decreased for Q2 and H1 2025 compared to 2024, primarily due to lower product and rental revenues and increased expenses Statement of Income Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $273,575 | $290,389 | $553,894 | $564,512 | | Operating Income | $60,805 | $79,819 | $129,417 | $142,369 | | Net Income | $49,047 | $63,059 | $103,152 | $112,874 | | Diluted EPS | $0.59 | $0.75 | $1.23 | $1.35 | Condensed Consolidated Statements of Cash Flows Net cash from operations decreased to $124.4 million in H1 2025 due to lower earnings, while investing cash outflows increased due to an affiliate investment Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $124,380 | $164,218 | | Net cash used in investing activities | ($26,507) | ($14,054) | | Net cash used in financing activities | ($36,546) | ($37,195) | | Net increase in cash | $62,334 | $112,711 | Notes to Financial Statements Notes detail business segments, recent transactions, accounting policies, and financial line items, including two operating segments and a pending Baker Hughes acquisition - The company operates in two business segments: Pressure Control and Spoolable Technologies27 - In June 2025, the company entered into an agreement to acquire a controlling interest in Baker Hughes Company's surface pressure control business31 Revenue by Category for Six Months Ended June 30 (in thousands) | Revenue Category | 2025 | % of Total | 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $417,223 | 75% | $428,412 | 76% | | Rental revenue | $48,908 | 9% | $49,150 | 9% | | Field service and other | $87,763 | 16% | $86,950 | 15% | | Total revenues | $553,894 | 100% | $564,512 | 100% | - The company is involved in patent litigation with Cameron International Corporation regarding its SafeLink® frac flow system. The outcome is currently unpredictable6566 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses H1 2025 financial performance, noting decreased revenues, segment trends, market factors, the Baker Hughes acquisition, and strong liquidity Recent Developments and Trends Key market factors include declining oil prices and drilling activity, new tariffs, and the $344.5 million acquisition of Baker Hughes' surface pressure control business Key Market Indicators | Indicator | Q2 2025 | Q1 2025 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | WTI Oil Price ($/bbl) | $64.57 | $71.78 | $68.12 | $79.69 | | U.S. Land Drilling Rigs | 556 | 572 | 564 | 593 | - The company is facing elevated tariff expenses on goods from Vietnam and China and higher steel costs due to Section 232 tariffs, which could impact profitability94 - Cactus will acquire a 65% interest in Baker Hughes' surface pressure control business for a cash price of $344.5 million, creating a joint venture, expected to close in late 2025 or early 20269799 Results of Operations Total revenues decreased sequentially in Q2 2025 and year-over-year for H1 2025, with varied segment performance and increased corporate expenses Q2 2025 vs Q1 2025 Segment Performance (in thousands) | Segment | Q2 2025 Revenue | Q1 2025 Revenue | % Change | Q2 2025 Op. Income | Q1 2025 Op. Income | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Pressure Control | $179,772 | $190,277 | (5.5)% | $42,333 | $54,333 | (22.1)% | | Spoolable Technologies | $96,225 | $92,578 | 3.9% | $28,053 | $23,876 | 17.5% | H1 2025 vs H1 2024 Segment Performance (in thousands) | Segment | H1 2025 Revenue | H1 2024 Revenue | % Change | H1 2025 Op. Income | H1 2024 Op. Income | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Pressure Control | $370,049 | $362,220 | 2.2% | $96,666 | $107,344 | (9.9)% | | Spoolable Technologies | $188,803 | $202,811 | (6.9)% | $51,929 | $46,434 | 11.8% | Liquidity and Capital Resources The company maintains strong liquidity with $405.2 million cash and $222.6 million credit availability, sufficient to fund operations and the Baker Hughes acquisition - As of June 30, 2025, the company had $405.2 million in cash and cash equivalents and $222.6 million of available borrowing capacity115 - The company expects to fund the Baker Hughes Transaction using cash on hand and its undrawn credit facility117 - Estimated net capital expenditures for 2025 are projected to be between $40 million and $45 million118 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's exposure to market risk has not materially changed since December 31, 2024 - There have been no material changes in the company's exposure to market risk since December 31, 2024123 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control during Q2 2025 - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025124 - No changes occurred in internal control over financial reporting during Q2 2025 that have materially affected, or are reasonably likely to materially affect, internal controls125 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is engaged in a patent infringement lawsuit with Cameron International Corporation regarding its SafeLink® frac flow system, with an unpredictable outcome - Cactus is in a legal dispute with Cameron International Corporation over alleged patent infringement by its SafeLink® frac flow system129 - The jury trial, originally scheduled for June 9, 2025, has been delayed with no new date set. The company cannot predict the outcome of these claims129 Item 1A. Risk Factors New risk factors primarily relate to the pending Baker Hughes Transaction, including integration challenges, unknown liabilities, and international expansion hurdles - New risks have been identified related to the Baker Hughes Transaction, including131133134136 - Failure to realize anticipated strategic and financial benefits - Difficulties in integrating the Joint Venture's operations, which could disrupt business and lead to loss of key employees - Potential for unknown or underestimated liabilities from the acquired business - Obstacles related to expanding into new geographic regions like the Middle East, including geopolitical risks and unfamiliar regulatory environments Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased Class A common stock from employees for tax obligations in Q2 2025, with $146.3 million remaining authorized under its repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Avg. Price Paid | Remaining Authorization | | :--- | :--- | :--- | :--- | | April 2025 | 1,197 | $37.81 | - | | May 2025 | 3,273 | $41.32 | - | | June 2025 | 717 | $44.10 | - | | Total | 5,187 | $40.90 | $146,302,153 | - The shares purchased were from employees to satisfy tax withholding obligations and were not part of the publicly announced repurchase program138 Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025139 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including agreements, corporate governance documents, and CEO/CFO certifications